CEO John Wisbey told us that a combination of cost control and demand across its regulatory, and trading and risk businesses where demand for risk management products was particularly good, has resulted in revenue jumping 10% to £6.4m but pre tax profits shooting up from just £0.2m to £1.3m for the six months ending September 30 2011.
While the 10% half year revenue growth looks small compared to the 32% that the last full year delivered (suggesting full year growth will not be matched) (see here), Wisbey said this was because unlike last year the current year has not seen much regulatory change – there was none in the UK which is c40% of Lombard Risk’s business. Regulatory change comes in waves, which the company rides. The next couple of years are expected to be heavy on regulatory change - Basel III, the Dodd-Frank Act and Solvency 2 – which will boost Lombard Risk’s business.
Risk management has been the story of the year with the COLLINE collateral management and clearing solution doing well and two tier one European banks now on board – both were strategically important in building the profile of the product but Wisbey said they were game changers because of the incremental revenue they bring. Together the deals will bring £3m to Lombard Risk over two years.
The outlook looks positive with aspects of the economic backdrop aiding the company as nervousness makes banks want to better manage their credit and risk.